The measure is a major component of Perry's plan to revamp the way Texas pays for public education before a court-ordered deadline of June 1. The new law will help deliver a record $15.7 billion property tax reduction over three years, Perry said.

"It is the largest of its kind in America and significantly reduces the impact of Robin Hood," he said, referring to a state system that distributes some money from wealthy districts to poorer ones.

The measure is one of five school-finance bills passed during a 29-day special session that adjourned Monday.

"Our entire school finance plan will lead to better schools, a stronger economy and a better future," he said before signing the bill.

The law establishes a $3.4 billion tax expansion for next year and changes the state's business tax so more companies have to pay it.

Perry praised the law as a reliable source of funding for schools and fairer to employers than the previous loophole-ridden franchise tax.

The old tax system allowed businesses with good accountants to avoid paying taxes, meaning other businesses carried an unfair load, school districts struggled and local school property taxes skyrocketed, Perry said.

Assorted business groups, including manufacturers, retailers and service industry companies, endorsed the new business tax.

The legislation levies a tax on 1 percent of a company's gross receipts while retailers would pay at a rate of 0.5 percent. It allows deductions for either the cost of goods or employee benefits such as health care.

Perry said the deductions serve as an incentive by rewarding businesses for offering additional benefits to their employees.